If you enjoy experiences in which you feel your head can explode, let someone knowledgeable and objective talk to you about all the different ways a company can go public. IPO. Self-underwriting. Self-filing through Form 10. Self-filing through Form S-1. Reverse merger with trading shell, non-trading shell, reporting shell, non-reporting shell, etc. Regulation A offering. And so on.
Yet a key question to ask anyone advising you on going public is: Can you explain the advantages and disadvantages of the various methods of going public in today’s market and regulatory environment? The relative benefits and costs of the different choices change over time, and even from year to year depending on market conditions and changes in regulations. Most important: there is no one solution that is right for every company. A good advisor starts by understanding your goals and plans as a public company and working back from there.
Be cautious, however, as different advisors have different “pet” directions they like to take companies. As they advise, get a sense of how the advisor’s financial benefit is tied into the choice(s) he or she recommends vs. directing you based on their detached analysis of choices that create the most potential long-term upside in each company’s unique situation. One day I hope that all new clients calling me with a going public strategy recommended to them can clearly answer the question, “Why did you choose that route?” without saying, “I don’t know, it’s what the advisor recommended.”
Read additional articles at the David Feldman Blog.
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